Application of an error correction model in assessment and forecasting of energy consumption in the European Union

Abstract

In the following framework, efforts of building a model of energy consumption with regard to basic macroeconomic factors such as GDP, CPI and demographic variables, have been undertaken. Above-mentioned model, thanks to an error correction mechanism enables to indicate short- and long-term relations between analyzed variables. The spatial and time sample which was chosen for the research, includes data from 1980 - 2005 from the European Union countries. The application of such cross sample and decomposition of absolute term, enables to indicate certain general regularities in analyzed phenomenon, and also typical for particular countries. From empirical point of view, created model can be used in preparation of simulations and forecasts with planned energy consumption on the national and international level.